TORONTO (Reuters) - The pace of purchasing activity in the Canadian economy in July rose to its highest level in four months, according to Ivey Purchasing Managers Index data released on Tuesday.
The data showed the seasonally adjusted index climbed to 62.8 in July from 49.0 in June, its highest level since March. Analysts polled by Reuters had forecast a reading of 52.5.
Any index reading below 50 indicates that activity contracted from the preceding month.
But the data garnered little market reaction and economists and strategists suggested that Canada's growth picture is still vulnerable to a fragile U.S. economic recovery as well as Europe's debt woes. <MKTS/GLOB>
"This is just one data point. Some of the other numbers have been on the soft side," said Peter Buchanan, senior economist at CIBC World Markets.
"We do think Canada is facing some growth headwinds here. The saying is one swallow does not make a spring. I think I would want to see a few more data points on this."
Indeed, TD Securities pointed to last week's RBC Canadian Manufacturing Purchasing Managers' Index, which showed manufacturing slowed sharply in July as deteriorating global economic conditions cooled activity.
"We would caution against reading too much into the rebound in confidence implied by this release," David Tulk, Canada macro strategist TD Securities, said of Tuesday's Ivey data.
"The RBC PMI -- which focuses exclusively on the manufacturing index -- slipped from 54.8 in June to 53.1 in July, which is below the historical average of 54.2 and the lowest level on record since March."
The RBC report came on the heels of government data that showed Canada's economy grew by a less-than-expected 0.1 percent in May from April, hurt by weakness in the manufacturing sector.
Recent data could help push the Bank of Canada to stay on the sidelines on raising interest rates until at least 2013 as economic growth doesn't look robust enough to cause inflationary pressures. <CA/POLL>
The Ivey PMI showed the employment index sank slightly to 54.3 in July from 59.3 in June. Inventories rose to 55 in July from 53.9 in June, while supplier deliveries slipped to 50.3 from 51.1 in the previous month.
The Ivey PMI's unadjusted index was at 58.8 in July from 55.3 in the previous month.
Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson; and Peter Galloway